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1H 2022 Consolidated Results Presentation

Terna reported its consolidated results for the first half of 2022. Revenues increased 6% to €1.331 billion driven by higher regulated transmission and dispatching activities. EBITDA grew 4% to €947 million and group net income increased 4% to €398 million. Capex was up 10% to €661 million, primarily directed towards development projects. Net debt declined to €8.994 billion due to strong operating cash flow. Terna reaffirmed all its 2022 targets and continues progress on its 2021-2025 industrial plan.

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1H 2022 Consolidated Results Rome, July 28th 2022
7 Closing Remarks 16 1H 2022 Results 3 Highlights Agenda 2 19 Annexes
Highlights 3
Highlights 4 Main achievements Institutional role for the Country STRATEGY ESG SHAREHOLDERS REMUNERATION ▪ 19.29 € cents/share, paid in June as 2021 Final Dividend ▪ Inclusion in the main sustainability indexes ▪ 2021-2025 Industrial Plan Update ▪ Construction activities and authorization processes well on track ▪ Latin America deconsolidation process in line with planned milestones INTERNATIONAL PEOPLE ▪ Tyrrhenian Lab project ▪ Terna Academy
Highlights 5 Demand Evolution – Last 12 months DEMAND AS REPORTED (TWh) ▪ National Demand at 158 TWh, o/w ~33% covered by RES ▪ Net Total Production at 138 TWh, o/w ~37% covered by RES 1H 2022 Note: 2020 final figures, 2021 and 2022 preliminary figures Guaranteeing security of supply 1H 2022 TWh 30.4 26.6 27.0 26.4 26.4 27.4 27.5 25.5 27.3 24.1 25.7 27.9 22 24 26 28 30 32 34 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Monthly energy demand Previous Year Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun YoY Chg% 5.9% 3.4% 2.5% 1.5% 3.8% 5.9% 1.5% 2.8% 3.5% 0.6% 5.5% 2.7% Δ % 2.7% 1H22 1H21 158.0 153.8
Highlights 6 1H 2022 Key Numbers Solid set of results and guaranteed growth 1. Attributable to Terna Note: 2021 results have been restated for International Activities Held for Sale, according to IFRS5 accounting principle Revenues +6% EBITDA +4% Group Net Income1 +4% Capex +10% Net Debt 10,003 1,259 910 385 602 8,994 1,331 947 398 661 Restated €mn Actual €mn 1H 2021 1H 2022 ∆ vs 1H 2021 restated Actual €mn 1,256 910 385 600 FY 2021 1H 2022
1H 2022 Results 7
1,093 1,154 163 177 0.3 0.0 1,256 60 15 -0.3 1,331 1H21 ∆ Regulated Activities ∆ Non Regulated Activities ∆ International Activities 1H22 1H 2022 Results 8 Revenues Note: figures may not add up due to rounding 1. Including IFRIC12 Regulated and Non Regulated revenues as growth driver Regulated Activities1 Non Regulated Act. International Act. €mn +75 +5.9% 1
1H 2022 Results 9 Revenues Analysis Note: figures may not add up due to rounding Higher contribution from Regulated activities €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +60 +5.5% +14 +8.8% Non Regulated Act. International Act. 1,054 1,113 25 59 -6 7 18 15 23 1,093 1,154 1H21 ∆ Transmission & Dispatching ∆ Other ∆ IFRIC12 1H22 Transmission & Dispatching Other IFRIC12 163 177 0.3 0.0 163 15 -0.3 177 1H21 ∆ Non Regulated Activities ∆ International Activities 1H22
212 231 131 150 4 3 19 19 -0.5 346 384 1H21 ∆ Regulated Activities¹ ∆ Non Regulated Activities ∆ International Activities 1H22 1H 2022 Results 10 Opex Note: figures may not add up due to rounding 1. Including IFRIC12 Operating costs evolution driven by skills insourcing Regulated Activities1 Non Regulated Act. International Act. €mn +38 +10.8% 1
1H 2022 Results 11 EBITDA Note: figures may not add up due to rounding EBITDA growth driven by Regulated activities €mn GROUP €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +37 +4.1% 910 947 1H21 1H22 882 923 41 1H21 ∆ 1H22 28 24 -4 1H21 ∆ 1H22
947 607 398 385 340 36 161 10 3 EBITDA D&A EBIT Net Financial Expenses Taxes (Profit)/Loss from discontinued operation Minority Interest Group Net Income Group Net Income 1H21 1H 2022 Results 12 From EBITDA to Net Income Note: figures may not add up due to rounding 1. Attributable to Terna. +4% increase in Group Net Income €mn +4% YoY 1 1
571 629 28 31 1H21 1H22 Regulated Non Regulated and Other 37% 16% 47% Development Defence Asset Renewal & Efficiency 629 1H 2022 Results 13 Capex Note: figures may not add up due to rounding 1. Of which about 10 €mn of Capitalized Financial Charges in 2022 and 5 €mn in 2021 Double-digit capex acceleration TOTAL CAPEX €mn REGULATED CAPEX €mn 1 661 600 Development Defence Asset Renewal & Efficiency
10.003 8.994 740 249 661 680 Dec.31, 2021 Operating Cash Flow Δ WC & Other Capex Dividends,Equity & Others Jun.30, 2022 1H 2022 Results 14 Cash Flow & Net Debt Evolution 1. Including Other Fixed Assets Changes 2. Including Assets Held for Sale, Cash Flow Hedge reserve, Hybrid Green Bond and other Note: figures may not add up due to rounding Strong operating cash flow to cover investments 2 1 €mn -1.009
~11€bn 63% 19% 18% 1H 2022 Results 15 Net Debt Evolution & Financial Structure 1. Percentages and key ratios calculated on Gross Debt nominal value 2. IAS value Maintaining a solid and diversified financial structure GROSS DEBT BREAKDOWN KEY RATIOS 1 1 ~ 86% Fixed ~ 5 years 2 Calculated on Gross Debt Fixed/Floating Ratio Maturity Terna SpA Bonds EIB Banks
Closing Remarks 16
Closing remarks 17 Benefits for the system and output-based incentives Electricity demand recovery in a challenging scenario All targets confirmed
18 Q&ASession
Annexes 19
Annexes 20 Consolidated Income Statement1 Note: figures may not add up due to rounding 1. Managerial Accounting 2. Including Quality of Service € mn 1H22 1H21 Δmn Δ% Total Revenue 1,331 1,256 75 5.9% Regulated Activities 1,154 1,093 60 5.5% Transmission 1,000 998 2 0.2% Dispatching 113 55 58 103.8% Other² 18 25 -6 -25.3% IFRIC12 23 15 7 48.0% Non Regulated Activities 177 163 15 9.0% International Activities 0 0 0 -100.0% Total Costs 384 346 38 10.8% Regulated Activities 231 212 19 9.1% Labour Costs 126 113 13 11.9% External Costs 74 72 2 2.7% Other² 9 12 -3 -28.1% IFRIC12 23 15 7 48.0% Non Regulated Activities 150 131 19 14.3% International Activities 3 4 -1 -14.3% EBITDA 947 910 37 4.1% D&A 340 326 14 4.3% EBIT 607 584 23 3.9% Net Financial Charges 36 34 2 6.2% Pre Tax Profit 571 550 21 3.8% Taxes 161 157 4 2.6% Tax Rate (%) 28.1% 28.4% - -0.3 pp Net Income 411 394 17 4.3% Net Financial Charges (Profit)/Loss From Discontinued Operations -10 -8 -2 29.5% Total Net Income 401 386 15 3.8% Minority Interest 3 1 1 78.6% Group Net Income 398 385 14 3.5%
Annexes 21 Consolidated Income Statement1 Note: figures may not add up due to rounding 1. Managerial Accounting 2. Including Quality of Service € mn 1H 21 Reported Restatement 1H 21 Restated Δ% Total Revenue 1,259 -2 1,256 -0.2% Regulated Activities 1,093 0 1,093 0.0% Transmission 998 0 998 0.0% Dispatching 55 0 55 0.0% Other² 25 0 25 0.0% IFRIC12 15 0 15 -0.1% Non Regulated Activities 163 0 163 0.0% International Activities 3 -2 0 -88.9% Total Costs 348 -2 346 -0.5% Regulated Activities 212 0 212 0.0% Labour Costs 113 0 113 0.0% External Costs 72 0 72 0.0% Other² 12 0 12 0.0% IFRIC12 15 0 15 0.0% Non Regulated Activities 131 0 131 0.0% International Activities 5 -2 4 -35.0% EBITDA 910 -1 910 -0.1% D&A 326 0 326 0.0% EBIT 585 0 584 -0.1% Net Financial Charges 41 -7 34 -17.0% Pre Tax Profit 544 7 550 1.2% Taxes 158 -1 157 -0.8% Net Income 386 8 394 2.0% (Profit)/Loss From Discontinued Operations 0 -8 -8 100.0% Total Net Income 386 0 386 0.0% Minority Interest 1 0 1 -2.0% Group Net Income 385 0 385 0.0%
Annexes 22 Consolidated Balance Sheet € mn Jun. 30,2022 Dec. 31,2021 Δmn PP&E 15,553 15,317 237 Intangible Asset 701 657 44 Financial Inv. and Other 433 380 53 Total Fixed Assets 16,687 16,353 334 Net WC -1,967 -1,707 -260 Funds -50 -48 -2 Net Capital Invested 14,670 14,598 72 Net Assets Held for Sale 206 118 88 Total Net Capital Invested 14,876 14,716 161 Financed by: Consolidated Net Debt 8,994 10,003 -1,009 Total Shareholder's Equity 5,882 4,713 1,169 Total 14,876 14,716 161
Annexes 23 Consolidated Cash Flow Note: figures may not add up due to rounding 1. Net of assets’ disposal 2. Including Other Fixed Assets Changes 3. Including Cash Flow Hedge accruals, Hybrid Green Bond and other € mn 1H22 1H21 Total Net Income 401 386 D&A¹ 338 317 Net Change in Funds 2 -31 Operating Cash Flow 740 672 Δ Working Capital & Other² 249 -306 Cash Flow from Operating Activities 989 366 Capital Expenditures -661 -602 Free Cash Flow to Equity 328 -236 Net Assets Held for Sale -88 Dividends & Equity³ 769 -326 Change in Net Cash (Debt) 1,009 -562
Annexes 24 2022 Total Grid Fee* *ARERA Resolutions and Terna’s preliminary estimates, net of pass-through items Transmission Dispatching + 2.02€bn Transmission Dispatching + 2022 2021 = = 0.11€bn 1.91€bn Resolution 622/2021 Resolution 629/2021 1.95€bn Resolution 565/2020 0.11€bn Resolution 599/2020 2.06€bn 46% 18% 36% RAB remuneration Allowed Opex Allowed D&A
Disclaimer 25 THIS DOCUMENT HAS BEEN PREPARED BY TERNA S.P.A. (THE “COMPANY”) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES. THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION. THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE. HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE DATE THEY ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY’S ACTUAL RESULTS AND PROVISIONS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY’S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT, DIFFERENT INTERPRETATION OF THE LAW AND REGULATION, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. TERNA DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN TERNA’S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS. EXECUTIVE IN CHARGE OF THE PREPARATION OF ACCOUNTING DOCUMENTS “AGOSTINO SCORNAJENCHI” DECLARES, PURSUANT TO PARAGRAPH 2 OF ARTICLE 154-BIS OF THE CONSOLIDATED LAW ON FINANCE, THAT THE ACCOUNTING INFORMATION CONTAINED IN THIS PRESENTATION, FOR WHAT CONCERNS THE ACTUAL FIGURES, CORRESPONDS TO THE DOCUMENT RESULTS, BOOKS AND ACCOUNTING RECORDS.
Notes 26
27 investor.relations@terna.it www.terna.it
1H 2022 Consolidated Results Presentation